Bernstein Points to Ether as a Compelling Risk-Reward Investment.

Ether (ETH) has experienced slower growth compared to bitcoin (BTC) this year, but recent developments in exchange-traded fund (ETF) inflows suggest a potential turnaround, according to a research report from Bernstein.

The broker pointed out that Blackrock’s spot ether ETF saw an impressive $250 million in inflows on Friday, while the firm’s spot bitcoin ETF brought in just $137 million. Analysts at Bernstein, led by Gautam Chhugani, believe this shift in capital allocation is creating favorable supply-demand conditions for ETH, which could signal the end of its underperformance relative to bitcoin.

An additional factor supporting ether is the potential for staking yields. Bernstein emphasized that while initial ether ETF applications didn’t include staking yields due to regulatory concerns, a more crypto-friendly SEC under a “Trump 2.0” administration could change that. The report suggested that as Ethereum’s blockchain activity grows, staking yields could rise to 4-5%.

Ethereum continues to be the go-to platform for stablecoins and asset tokenization, fueling increased activity on the network. Since Ethereum’s shift to a proof-of-stake mechanism, the total supply of ether has remained relatively stable at 120 million tokens.

Currently, ether stakers earn around 3% through transaction fees, which has resulted in about 28% of ether being locked in staking contracts. Another 10% of the supply is tied up in deposit and lending contracts. Furthermore, nearly 60% of the ether supply has remained unchanged over the past 12 months, indicating a strong and stable investor base, which enhances the overall positive demand-supply dynamics for the cryptocurrency.